America’s gender and racial wealth gap and why it hurts families
How far would $5 get you these days? A couple of trips on the Metrorail, a mocha latte or two, probably not an entire meal- even at most fast food restaurants.
What if $5 was your entire net wealth? How prepared would you feel to weather an unforeseen financial emergency (not uncommon in today’s economic climate)?
Yet, this is the financial reality for many American women. A new study released by the Insight Center for Community Economic Development, entitled “Lifting as we Climb: Women of Color, Wealth and America’s Future” reports that on average, African American women have a wealth (net assets minus debt) of $100. Hispanic women have about $120 in wealth.
Looking at the numbers by age group, non-white women ages 36 to 49 have an average wealth of $5. When you subtract the average debt burden from the average amount of savings for this group of women, they’re left with only $5 in “wealth.”
And the story only gets worse. African American and Hispanic women who have never married have a net wealth of $0. (Latoya Peterson with The American Prospect does a good job of breaking down the issue in her post.)
The big question is: Why? Why do so many women, especially women of color and unmarried women have so little in terms of savings and wealth? The answer stems, in part, from the historic legacy of racism and gender bias in U.S. employment and consumer financial practices.
Women are not only paid lower wages than their male colleagues, but traditional “pink collar” jobs (such domestic service work and child care), typically pay appallingly paltry wages. (The Bureau of Labor Statistics has a wealth of information on its website regarding issues of women in the workforce.)
This legacy of poor pay and gender-linked wage discrimination means that many women have not had the same economic earning power as men. Couple this with the fact that many traditional pink collar jobs are often held by women of color and that many women of color were targeted in predatory lending practices during the heyday of subprime mortgages and the picture of inequality becomes even clearer.
In our current economic climate, savings and assets (wealth) play a critical role in helping shield American families from unexpected income shocks- allowing families to weather periods of economic uncertainty without falling further down the poverty ladder. Savings also creates a financial foundation that families can grow to increase their economic mobility.
Establishing policies that promote asset accumulation and work to level the economic playing field for women, especially women of color is a necessary step towards economic equality. With 25% of American children living in single-parent, mother-headed households, such policies will go a long ways towards promoting financial security for millions of American families.